American Girl debuts in Canada with boutiques in two Indigo stores

The popular doll brand, which sells for US$110 at its highly interactive U.S. stores and through a catalogue, will be opening boutiques inside two Indigo books stores in Toronto and Vancouver, complete with in-store doll hair salons, apparel and accessories

TORONTO • Inside its vast stores, Indigo Books and Music Inc. touts the slogan “The world needs more Canada”. But, as the retailer weathers damage to its core business from online book publishing and digital reading, Indigo needs American Girl.

The popular doll brand, which sells for US$110 at its highly interactive U.S. stores and through a catalogue, will come to Canada for the first time by opening boutiques inside two Indigo book stores in Toronto and Vancouver this spring. The sizable shops will come complete with a doll hair salon, apparel, books and accessories.

We are reshaping the overall footprint in our stores

While expanding its own online operations, Indigo has accordingly boosted its in-store assortment of toys, gifts and home accessories and décor to transform the bookseller into a “cultural” department store.

“We are reshaping the overall footprint in our stores,” said Heather Reisman, Indigo’s chief executive. “We are actually in a position to expand or sustain the book selection.”

Indigo intends to roll American Girl brand out to more of its locations across the country, she said, but did not specify a number.

The boutiques, on Vancouver’s Robson Street and in Toronto’s Yorkdale mall, will carry a broad assortment of the Mattel-owned doll lines, which include a category tied to U.S. history and more than 40 combinations of customizable dolls, available with different hair, eye and skin shades.

Indigo intends to roll American Girl brand out to more of its locations across the country, she said, but did not specify a number.

“As part of its offering, American Girl has books — every doll they introduce has a story associated with it and a whole value system embedded in that story,” Ms. Reisman said. “It is all about creative play and storytelling, and that is where we come from. Everything we stand for is reflected in the American Girl ethos.”

The stores will also feature dress-up events and storytelling parties, similar to its standalone locations in the U.S., where it has 15 stores.

“We obviously think it is going to be positive” for sales, said Ms. Reisman.

Indigo’s move comes after the CEO told shareholders at the annual meeting this summer that Indigo was in the middle of a “very difficult transformation ” with plans to reconfigure its large stores “from one main shop into a series of shops” to house 40 new in-store Apple technology shops, home goods, paper, design, baby and kids toys.

These are big-ticket items

Robert Gibson, a retail analyst at Octagon Capital in Toronto, estimates the retailer could add $20-million to $30-million in incremental revenue in fiscal 2016 if it replaces low volume book square footage with the American Girl boutiques, and $2-million to $3-million in net income.

“We believe they will be hugely successful, but because these are big-ticket items, we don’t believe they will initially be in every store,” he wrote in a note to clients Tuesday. He expects Indigo could open as many as 15 American Girl boutiques in major urban centres by the end of fiscal 2015.

Jean McKenzie, executive vice-president of American Girl, said the company’s move is a response to the growing number of Canadians who wanted the brand to have a retail presence in Canada.

The size of the in-store boutiques is still to be determined on a store-by-store basis, but the doll retailer is aiming for about 5,000 square feet. Chapters and Indigo superstores are an average of 20,000 to 30,000 square feet.

“We have had a growing number of requests and Canadian mothers and daughters who have sought us out through stores in the U.S., and that number has been growing pretty significantly over the past couple of years,” Ms. McKenzie said, while not divulging how many Canadians buy the dolls per year.

American Girl was the strongest performing in Mattel’s stable in the most recent third quarter, with gross sales for American Girl Brands up 20% over the prior year to US$122.3-million. Its gross sales were US$596.3-million in 2012, up 10%, and income in the segment rose 9% to US$121.6-million in 2012 compared with 2011.